ORDER NO. 97-190

ENTERED MAY 29 1997

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 773

DISPOSITION: REQUEST FOR HEARING DENIED

On April 15, 1997, U S WEST Communications, Inc., (USWC) filed a request for a hearing in this docket pursuant to ORS 756.515(5). The stated purpose of the hearing is "to determine whether certain findings set forth in the Commission’s Notice of Investigation in Docket UM 844 issued April 3, 1997, should continue in effect." The challenged "finding" is the statement in that Notice that cost studies filed by USWC in UM 773 pursuant to Order No. 96-284 were approved by the Commission "as modified by Staff." Specifically, USWC seeks a hearing on the Network Access Channel (NAC) costs approved by the Commission based upon Staff’s interpretation of Paragraph 16 of the Stipulation adopted in Order No. 96-284.

On May 1, 1997, MCI and AT&T filed a Joint Response opposing the request. PUC Staff filed no response.

Background

Order No. 96-284 in UM 773 was issued by the Commission on November 1, 1996. It adopted a Stipulation entered into by USWC and Staff resolving several issues relating to the determination of the costs of telecommunications services. The order directed USWC to file new cost studies conforming to the policies set out in the Stipulation. After USWC filed the studies, it, Staff, and other parties to UM 773 engaged in a lengthy period of review and analysis. USWC and Staff reached agreement on all issues but one. The unresolved issue is the meaning of Paragraph 16 of the Stipulation. Staff computed the costs of the NAC in accord with its interpretation of that Paragraph.

The Commission considered the matter at its April 1, 1997, public meeting. Staff presented a report setting out its recommendation that USWC’s cost studies, along with Staff’s revised study of NAC costs based on its interpretation of Paragraph 16, be adopted. Representatives from USWC presented their view on the interpretation of Paragraph 16, as did other interested persons. The Commission adopted the position presented by Staff and issued Order No. 97-145, which states:

The Commission approved Staff’s recommendation to adopt the building block cost studies as modified by Staff and summarized in Confidential Appendix A to this order. The cost studies were prepared in accordance with a stipulation approved by the Commission in Order No. 96-284 entered in this docket. The Commission specifically considered Paragraph 16 of the Stipulation adopted in Order No. 96-284 and adopted the position taken by Staff as to the application of that Paragraph. The UM 773 cost study results supersede the cost estimates previously approved by the Commission in docket UM 351.

Discussion

USWC asserts that Staff’s interpretation is contrary to the Cost Principles of UM 351, contrary to the Stipulation, and contrary to what "reasonable parties might agree to." It states that a hearing will enable "the parties to the Stipulation, namely U S WEST and Staff, to produce evidence in support of the intent of the Stipulation and demonstrate that the NAC costs studies that U S WEST has produced comply in all respect with the Stipulation." USWC included no affidavits with its request nor did it cite any portions of the record in UM 773 to support its request.

The Joint Response of MCI and AT&T cites several bases for opposition to the request for hearing. It characterizes the request as in reality an untimely request for reconsideration of Order No. 96-284, which was issued on November 1, 1996. It claims that the issue involved has been fully and finally litigated. It argues that the cost studies are a "compliance" filing and thus subject to modification or rejection by the Commission without further investigation or hearing. The Joint Response also argues that the language of Paragraph 16 is clear and unambiguous and thus not subject to modification through evidence outside the "four corners" of the document. Finally, the Joint Response claims that the Commission has indicated in the Notice of Investigation in UM 844 that it regards the decision to adopt the modified cost studies as final.

Disposition

The request for a hearing is denied. Order No. 96-284 indeed contemplates the possibility that the parties to UM 773 might disagree about whether the new cost studies filed by USWC comport with the Stipulation and that additional "proceedings" might be necessary to resolve the disputes. For example, the order notes on page 5 that "The parties anticipate that if any dispute is unresolved, another proceeding might be necessary to consider the issues. Eventually the Commission would make a final decision on the resubmitted cost studies." In our later discussion in Order No. 96-284 of claims by intervenors that the Stipulation gives too much discretion to USWC, we concluded as follows:

Moreover, the Stipulation does not allow U S WEST to make unilateral modifications. Anything the company might propose would be subject to review by Staff and consideration by the Commission. Additionally, as Staff notes, other parties may participate in processes or proceedings that may result from requests for change.

These provisions provide a means for thorough consideration of USWC’s revised cost studies before they are accepted by Staff and adopted by the Commission. They do not, however, call for an evidentiary hearing, which is what USWC obviously seeks now. There is no reason for an evidentiary hearing. The lengthy procedure followed in UM 773, including the submission of extensive written testimony and argument and four days of oral hearing, provided us with a substantial record upon which to base the decisions set out in Order No. 96-284, including our understanding of Paragraph 16 of the Stipulation. Then, before we considered the cost studies, they were subjected to thorough audit and review. Finally, we permitted USWC to make a presentation at the April 1, 1997, public meeting before we adopted the studies as modified. We conclude that the issues raised by USWC have been carefully and completely considered in keeping with the terms of Order No. 96-284. We add that USWC’s request for a hearing is quite short on any specific bases for additional consideration. It cites nothing in the extensive record of the case to support its request and includes no affidavits from those with knowledge of the matters in question.

We note that USWC has not objected at any time to the procedure set out in Order No. 96-284 for consideration of disputes which might arise in connection with the cost studies it was required to file. It could have done so through a request for reconsideration of that issue within the time allowed by statute, 60 days following issuance of Order No. 96-284. It filed no request for reconsideration of the order’s procedures for dealing with disputes involving the cost studies. Thus, to the extent its present request can be considered an application for reconsideration of Order No. 96-284, it is denied as untimely.

To the extent that USWC’s request may be considered an application for reconsideration of Order No. 97-145 (or of the Notice in UM 844), it is denied. Our rule on applications for reconsideration or rehearing, OAR 860-014-0095 (3), sets out the grounds for reconsideration or rehearing as follows:

New evidence which is essential to the decision and which was unavailable and not reasonably discoverable prior to issuance of the order

A change in the law or agency policy since the date the order was issued, relating to a matter essential to the decision;

An error of fact or law in the order which is essential to the decision; or

Good cause for further examination of a matter essential to the decision.

USWC cites no ground that satisfies any of these criteria and the Commission sees none. To be short about it, we have already considered and rejected, through the procedure described above, all of USWC’s arguments relating to Paragraph 16. There is no basis for granting reconsideration or rehearing.

We are not persuaded that ORS 756.515(5) provides a right to a hearing, as USWC claims. ORS 756.515(4) allows the Commission to decide a matter after investigation without notice or hearing. Subsection (5) provides that where the Commission issues a decision without providing for a hearing, a party may then request a hearing and the Commission "shall hold" the hearing. That is not the situation here. As we have noted above, an extensive hearing occurred in this case. The meaning of the Stipulation, including Paragraph 16, was a subject of that hearing and was an issue considered and decided by the Commission, as the order plainly shows on pages 10 and 23:

Paragraph 16. In this section, the parties agree that the proper categorization of growth spare capacity as building block volume sensitive or building block volume insensitive is an issue that requires long term resolution. They note that they were unable to determine any objective fill factor for distribution and feeder facilities. They agree to the use of feeder fill factors as a surrogate for distribution and drop fill when U S WEST performs cost studies pursuant to the Stipulation. The feeder fill factors used in UM 351 (I) will be used for this purpose. They also agree that volume-insensitive costs for feeder and distribution will be included in the NAC building block, a change from UM 351 (I). (at 10)

In Paragraph 16, the parties agree to the use of feeder fill factors as a surrogate for distribution and drop fill when U S WEST performs cost studies pursuant to the Stipulation. The feeder fill factors used in UM 351 (I) will thus be used for this purpose. They note also that they were unable to determine any objective fill factor for distribution and feeder facilities. (at 23)

These summaries directly mirror the language in the Stipulation. The language clearly provides that feeder fill factors shall be used as a surrogate for distribution and drop fill. We provided an additional opportunity to USWC, at the April 1, 1997, public meeting, to present its position on that issue. The Commission’s decision on this issue cannot be characterized as one made without notice and hearing. USWC has no right to a hearing under ORS 756.515(5).

USWC asserts in its request that the interpretation of Paragraph 16 adopted by the Commission is contrary to the Cost Principles established in UM 351. It does not specify what it means. We addressed that issue in Order No. 96-284 and concluded that the Stipulation, as we interpreted it in the order, conforms to those principles. (at pp. 27-28) Moreover, the real issue at this point is the meaning of the Stipulation, not its conformance with the cost principles.

USWC’s request also states that our interpretation is contrary to what "reasonable parties" might agree to. However, our decision is, we believe, a reasonable application of the facts and arguments in the case. We remind USWC that a Stipulation is a compromise between or among the parties to a case. It always involves some give and take. Some provisions may be in a party’s interest, others may be contrary to that party’s interests. Thus, the fact that by itself Paragraph 16, as we have interpreted it, is contrary to the interests of USWC does not suggest that the interpretation is wrong or unreasonable. Other paragraphs, in isolation, may benefit USWC. The effect of a particular paragraph is not an indication of the intent of the parties to the Stipulation but only a function of the bargaining involved.

We conclude that our decisions in Order No. 97-145 are supported by the record in this case and are appropriate. There is no basis for further hearings on the matter.

ORDER

The request for a hearing by USWC is denied.

Made, entered, and effective ________________________. 

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements in OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070(2). A party may appeal this order to a court pursuant to ORS 756.580.